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Testimony:
Before the Committee on Energy and Natural Resources, U.S. Senate:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EST:
Tuesday, March 30, 2004:
ENERGY EMPLOYEES COMPENSATION:
Obstacles Remain in Processing Cases Efficiently and Ensuring a Source
of Benefit Payments:
Statement of Robert E. Robertson, Director Education, Workforce, and
Income Security Issues:
GAO-04-571T:
GAO Highlights:
Highlights of GAO-04-571T, testimony before the Committee on Energy and
Natural Resources, U.S. Senate
Why GAO Did This Study:
The Department of Energy (Energy) and its predecessor agencies and
contractors have employed thousands of people in the nuclear weapons
production complex. Some employees were exposed to toxic substances,
including radioactive and hazardous materials, during this work, and
many subsequently developed illnesses. Subtitle D of the Energy
Employees Occupational Illness Compensation Program Act of 2000 allows
Energy to help its contractor employees file state workers’
compensation claims for illnesses determined by a panel of physicians
to be caused by exposure to toxic substances in the course of
employment at an Energy facility.
Congress mandated that GAO study the effectiveness of the benefit
program under Subtitle D of this Act. This testimony is based on GAO’s
ongoing work on this issue and focuses on four key areas:
(1) the number, status, and characteristics of claims filed with
Energy; (2) the extent to which Energy policies and procedures help
employees file timely claims for these state benefits; (3) the extent
to which there will be a “willing payer” of workers’ compensation
benefits, that is, an insurer who—by order from or agreement with
Energy—will not contest these claims; and (4) a framework that could be
used for evaluating possible options for changing the program.
What GAO Found:
During the first 2 ½ years of the program, ending December 31, 2003,
Energy had completely processed about 6 percent of the more than 23,000
cases that had been filed. Energy had begun processing of nearly 35
percent of cases, but processing had not yet begun on nearly 60 percent
of the cases.
While Energy got off to a slow start in processing cases, it is now
processing enough cases that there is a backlog of cases waiting for
review by a physician panel. Energy has taken some steps intended to
reduce this backlog, such as reducing the number of physicians needed
for some panels. Nonetheless, a shortage of qualified physicians
continues to constrain the agency’s capacity to decide cases more
quickly. Consequently, claimants will likely continue to experience
lengthy delays in receiving the determinations they need to file
workers’ compensation claims.
GAO estimates that more than half of the cases associated with Energy
facilities in 9 states that account for more than three-quarters of all
Subtitle D cases filed are likely to have a willing payer of benefits.
Another quarter of the cases in these 9 states, while not technically
having a willing payer, have workers’ compensation coverage provided by
an insurer that has stated that it will not contest these claims.
However, the remaining 20 percent of cases lack willing payers and are
likely to be contested, which means that many of these cases may be
less likely to receive compensation. Because of data limitations, these
percentages provide an order of magnitude estimate of the extent to
which claimants will have willing payers. The estimates are not a
prediction of actual benefit outcomes for claimants.
In this testimony, GAO also provides a framework for evaluating
potential options for changing the program to address the willing payer
issue. This framework includes a range of issues that would help the
Congress assess options if it chooses to change the current program.
One of these issues in particular—the federal cost implications—should
be carefully considered in the context of the current federal fiscal
environment.
www.gao.gov/cgi-bin/getrpt?GAO-04-571T.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Robert E. Robertson at
(202) 512-7215 or robertsonr@gao.gov.
[End of section]
Mr. Chairman and Members of the Committee:
I am pleased to be here today to update the information we provided in
our November 21, 2003 testimony before you on our work regarding the
effectiveness of the benefit program under Subtitle D of the Energy
Employees Occupational Illness Compensation Program Act of 2000
(EEOICPA). This legislation was designed to provide assistance to
contractor employees in obtaining compensation for occupational
illnesses. Congress mandated that we study this issue and report to the
Senate Committees on Energy and Natural Resources and Appropriations
and the House Committees on Energy and Commerce and Appropriations.
For the last several decades, the Department of Energy (Energy) and its
predecessor agencies and contractors have employed thousands of
individuals in secret and dangerous work in the nuclear weapons
production complex. Over the years, employees were unknowingly exposed
to toxic substances, including radioactive and hazardous materials, and
studies such as one commissioned by the National Economic Council have
shown that many of these employees subsequently developed serious
illnesses. EEOICPA established two programs to help secure compensation
for employees who developed occupational illnesses or for their
survivors. Congressional Committees, as well as individual Members of
Congress, claimants, and advocates have raised concerns regarding
Energy's processing of claims and the availability of benefits once
claims have been decided.
Enacted as title XXXVI of the Floyd D. Spence National Defense
Authorization Act for Fiscal Year 2001, which was signed into law on
October 30, 2000, this legislation has two major components. Subtitle B
provides eligible workers who were exposed to radiation or other toxic
substances and who subsequently developed illnesses such as cancer and
lung disease a one-time payment of up to $150,000 and covers future
medical expenses related to the illness. The Department of Labor
administers these benefits, payable from a compensation fund
established by the same legislation. Subtitle D allows Energy to help
its contractor employees file state workers' compensation claims for
illnesses determined by a panel of physicians to be caused by exposure
to toxic substances in the course of employment at an Energy facility.
My testimony today reflects our ongoing review of the effectiveness of
Energy's implementation of Subtitle D. Our work is focused on four key
areas: (1) the number, status, and characteristics of claims filed with
Energy; (2) the extent to which Energy policies and procedures help
employees file timely claims for state workers' compensation benefits;
(3) the extent to which there will be a "willing payer" of workers'
compensation benefits; that is, an insurer who--by order from, or
agreement with, Energy--will not contest these claims; and (4) a
framework that could be used for evaluating possible options for
changing the program in the event that there may not be willing payers
of benefits.
In summary, as of December 31, 2003, Energy had fully processed about 6
percent of the more than 23,000 cases received. Most of the fully
processed cases had been found ineligible because of either a lack of
employment at an eligible facility or an illness related to toxic
exposure. While Energy got off to a slow start in processing cases, it
is now processing enough cases that there is a backlog of cases waiting
for review by a physician panel. The agency has taken some steps to
reduce this backlog; nonetheless, a shortage of qualified physicians
continues to constrain Energy's capacity to decide cases more quickly.
In the meantime, Energy has not kept claimants sufficiently informed
about the delays in the processing of their claims as well as what
claimants can expect as they proceed with state workers' compensation
claims.
While the workers' compensation claims from about 80 percent of the
cases associated with major Energy facilities in 9 states are not
likely to be contested by employers or their insurers, actual
compensation is not certain. This figure is based primarily on the
method of workers' compensation coverage used by the Energy contractors
and is not an estimate of the number of cases that will ultimately be
paid. Specifically, slightly more than half the cases associated with
facilities in the 9 states are likely to have a willing payer of
benefits and another quarter of the cases, while not having willing
payers, have workers' compensation coverage provided by an insurer that
has stated that it will not contest the claim for benefits. However,
the remaining 20 percent of cases lack willing payers and are likely to
be contested, which means that many of these cases may be less likely
to receive compensation. Because of data limitations, these percentages
provide an order of magnitude estimate of the extent to which claimants
will have willing payers. The estimates are not a prediction of actual
benefit outcomes for claimants.
Various options are available to improve payment outcomes for the cases
that receive a positive physician panel determination, but lack willing
payers under the current program. If it were decided that the program
should be modified, the options for changing it range from adding a
federal benefit to the existing program for cases that lack a willing
payer to designing a completely new program. Congress would need to
examine these options in terms of several issues, including the source,
method, and amount of the federal funding required to pay benefits; the
length of time needed to implement changes; the criteria for
determining who is eligible; and the equitable treatment of claimants.
In particular, the federal cost implications of these options should be
carefully considered in the context of the current federal fiscal
environment.
To perform our review, we analyzed data extracted from Energy's
Subtitle D case management system for applications filed through June
30, 2003, and again through December 31, 2003.[Footnote 1] We also
reviewed the provisions of, and interviewed officials with, the
workers' compensation programs in nine states with Energy facilities
accounting for more than three-quarters of Subtitle D cases filed, and
we interviewed the contractors operating the major facilities in these
states. In addition, we conducted site visits to three Energy
facilities in Oak Ridge, Tennessee, the state with facilities
accounting for the largest number of Subtitle D claims. We also
interviewed key program officials and other experts. Although our
review is continuing, we conducted our work for this testimony from
April 2003 through March 2004 in accordance with generally accepted
government auditing standards.
Background:
Energy oversees a nationwide network of 40 contractor-operated
industrial sites and research laboratories that have historically
employed more than 600,000 workers in the production and testing of
nuclear weapons. In implementing EEOICPA, the President acknowledged
that it had been Energy's past policy to encourage and assist its
contractors in opposing workers' claims for state workers' compensation
benefits based on illnesses said to be caused by exposure to toxic
substances at Energy facilities.[Footnote 2] Under the new law, workers
or their survivors could apply for assistance from Energy in pursuing
state workers' compensation benefits, and if they received a positive
determination from Energy, the agency would direct its contractors to
not contest the workers' compensation claims or awards. Energy's rules
to implement the new program became effective in September 2002, and
the agency began to process the applications it had been accepting
since July 2001, when the law took effect.
Energy's claims process has several steps. First, claimants file
applications and provide all available medical evidence. Energy then
develops the claims by requesting records of employment, medical
treatment, and exposure to toxic substances from the Energy facilities
at which the workers were employed. If Energy determines that the
worker was not employed by one of its facilities or did not have an
illness that could be caused by exposure to toxic substances, the
agency finds the claimant ineligible. For all others, once development
is complete, a panel of three physicians reviews the case and decides
whether exposure to a toxic substance during employment at an Energy
facility was at least as likely as not to have caused, contributed to,
or aggravated the claimed medical condition. The panel physicians are
appointed by the National Institute for Occupational Safety and Health
(NIOSH) but paid by Energy for this work. Claimants receiving positive
determinations are advised that they may wish to file claims for state
workers' compensation benefits. Claimants found ineligible or receiving
negative determinations may appeal to Energy's Office of Hearings and
Appeals.
Figure 1: Figure 1. Energy's Claims Process:
[See PDF for image]
[End of figure]
Each of the 50 states and the District of Columbia has its own workers'
compensation program to provide benefits to workers who are injured on
the job or contract a work-related illness. Benefits include medical
treatment and cash payments that partially replace lost wages.
Collectively, these state programs paid more than $46 billion in cash
and medical benefits in 2001. In general, employers finance workers'
compensation programs. Depending on state law, employers finance these
programs through one of three methods: (1) they pay insurance premiums
to a private insurance carrier, (2) they contribute to a state workers'
compensation fund, or (3) they set funds aside for this purpose as
self-insurance. Although state workers' compensation laws were enacted
in part as an attempt to avoid litigation over workplace accidents, the
workers' compensation process is still generally adversarial, with
employers and their insurers tending to contest aspects of claims that
they consider not valid.
State workers' compensation programs vary as to the level of benefits,
length of payments, and time limits for filing. For example, in 1999,
the maximum weekly benefit for a total disability in New Mexico was
less than $400, while in Iowa it was approximately $950. In addition,
in Idaho, the weekly benefit for total disability would be reduced
after 52 weeks, while in Iowa benefits would continue at the original
rate for the duration of the disability. Further, in Tennessee, a claim
must be filed within 1 year of the beginning of incapacity or death. In
contrast, in Kentucky a claim must be filed within 3 years of either
the last exposure to most substances or onset of disease symptoms, but
within 20 years of exposure to radiation or asbestos.
Energy Has Processed Few Cases And Insufficient Strategic Planning And
Data Collection Complicate Program Management:
As of December 31, 2003, Energy had completely processed about 6
percent of the more than 23,000 cases that had been filed. Energy had
begun processing of nearly 35 percent of cases, but processing had not
yet begun on nearly 60 percent of the cases. Insufficient strategic
planning and systems limitations complicate assessment of Energy's
achievement of case processing goals. Further, these limitations make
it difficult to assess achievement of other broader goals, related to
program objectives, such as the quality of the assistance given to
claimants in filing for state workers' compensation.
Energy Has Fully Processed about 6 Percent of Its Cases:
During the first 2 ½ years of the program, ending December 31, 2003,
Energy had fully processed about 6 percent of the more than 23,000
claims it received. The majority of the fully processed claims (about 5
percent of all cases) had been found ineligible because of either a
lack of employment at an eligible facility or an illness related to
toxic exposure. In the last 6 months of 2003, Energy more than tripled
the number of cases receiving a final determination from a physician
panel, from 42 to 150. These 150 cases represent less than 1 percent of
the more than 23,000 cases filed.
While cases filed are associated with facilities in 43 states or
territories, the majority of cases are associated with Energy
facilities in 9 states. Facilities in Colorado, Idaho, Iowa, Kentucky,
New Mexico, Ohio, South Carolina, Tennessee, and Washington account for
more than 75 percent of cases received by December 31, 2003. The
largest group of cases is associated with facilities in Tennessee.
Figure 2. Distribution of Cases by Employee's Last Energy
Facility Worked:
[See PDF for image]
Note: Facility information is missing or unknown for 1,859 cases.
[End of figure]
A majority of all cases were filed during the first year of program
implementation, but new cases continue to be filed. Nationwide, the
number of cases filed increased by 22 percent in the last 6 months of
2003 from fewer than 19,000 to more than 23,000. However, the rate of
increase in cases filed was not uniform across the 9 states with
facilities that account for more than three-quarters of all cases. For
example, cases associated with facilities in Washington increased by 8
percent during the 6-month period while cases in New Mexico increased
by 34 percent and cases in Ohio increased by 80 percent.
As of the end of calendar year 2003, Energy had not yet begun
processing nearly 60 percent of the cases, and an additional 35 percent
of cases were in processing. The majority of cases being processed were
in the case development stage, where Energy requests information from
the facility at which the claimant was employed. Of the cases still in
processing, about 2 percent were ready for physician panel review and 3
percent were undergoing panel review.
Energy reports that, in recent months, it has considerably accelerated
the rate at which it is completing the development of cases that are
ready for physician panel review. Since our testimony in November 2003,
Energy's case development process has met the agency's goal of
completing the development on 100 cases per week, which is considerably
higher than the average of about 30 cases per week it was completing in
September 2003. Moreover, since our prior testimony, Energy has also
completed a comprehensive review of its Subtitle D program that
resulted in a plan that identifies strategies for further accelerating
its case processing. This plan sets a goal of eliminating the entire
case backlog by the end of fiscal year 2006 and is dependent, in part,
on Energy's shifting additional funds into this program.
Insufficient Strategic Planning and Data Collection Limit Energy's
Ability to Determine Whether Program Goals Are Being Met:
Insufficient strategic planning regarding system design, data
collection, and tracking of outcomes has made it more difficult for
Energy officials to manage some aspects of the program and for those
with oversight responsibilities to determine whether Energy is meeting
the goal of providing assistance in filing for workers' compensation.
The data system used by Energy to aid in case management was developed
by contractors without detailed specifications from Energy.
Furthermore, the system was developed before Energy established its
processing goals, and the changes Energy implemented to improve its
ability to track certain information have resulted in more recent
status data being not completely comparable with older status data.
Because it did not adequately plan for the various uses of its data,
Energy lacks some of the information needed to analyze how cases will
fare when they enter the state workers' compensation systems or to
track their outcomes. Specifically, it is difficult for Energy to
predict whether willing payers of workers' compensation benefits will
exist using case management system data because the information about
the specific employer for whom the claimant worked is not collected in
a format that can be systematically analyzed. Since employers are
liable for workers' compensation coverage, specific employer
information is important in determining whether a willing payer exists.
In addition, while Energy has not been systematically tracking whether
claimants subsequently file workers' compensation claims or the
decisions on these claims, Energy now plans to develop this capability.
A Shortage of Qualified Physicians To Issue Determinations Delays
Filing of Workers' Compensation Claims And Claimants May Receive
Inadequate Information To Prepare Them To Pursue These Claims:
Energy was slow in implementing its initial case processing operation,
but it is now processing enough cases so that there is a backlog of
cases awaiting physician panel review. With panels operating at full
capacity, the small pool of physicians qualified to serve on the panels
may ultimately limit the agency's ability to produce more timely
determinations. Claimants have experienced lengthy delays in receiving
the determinations they need to file workers' compensation claims and
have received little information about claims status as well as what
they can expect from this process. Energy has taken some steps intended
to reduce the backlog of cases.
The Ability to Produce More Timely Decisions May Be Limited by the
Small Pool of Qualified Physicians and Gaps in Information They Need to
Quickly Decide Cases:
Additional resources have allowed Energy to speed initial case
development, and it has been processing enough cases to produce a
backlog of cases waiting for physician panel review. However, the
limited pool of qualified physicians for panels may continue to prevent
significant improvements in processing time. Under the rules Energy
originally established for this program that required that each case be
reviewed by a panel of 3 physicians and given the 130 physicians
currently available, it could have taken more than 13 years to process
all cases pending as of December 31, without consideration of the
hundreds of new cases the agency is receiving each month.[Footnote 3]
However, in an effort to make the panel process more efficient, Energy
published new rules on March 24, 2004, that re-defined a physician
panel as one or more physicians appointed to evaluate these cases and
changed the timeframes for completing their review. In addition, the
agency began holding a full-time physician panel in Washington, D.C. in
January 2004, staffed by physicians who are willing to serve full-time
for a 2-or 3-week period.
Energy and NIOSH officials have taken steps to expand the number of
physicians who would qualify to serve on the panels and to recruit more
physicians, including some willing to work full-time. While Energy has
made several requests that NIOSH appoint additional physicians to staff
the panels, such as requesting 500 physicians in June 2003, NIOSH
officials have indicated that the pool of physicians with the
appropriate credentials and experience is limited.[Footnote 4] The
criteria NIOSH originally used to evaluate qualifications for
appointing physicians to these panels included: (1) board certification
in a primary discipline; (2) knowledge of occupational medicine; (3)
minimum of 5 years of relevant clinical practice following residency;
and (4) reputation for good medical judgment, impartiality, and
efficiency. NIOSH recently modified these qualifications, primarily to
reduce the amount of required clinical experience so that physicians
with experience in relevant clinical or public health practice or
research, academic, consulting, or private sector work can now qualify
to serve on the panels. NIOSH has revised its recruiting materials to
reflect this change and to point out that Energy is also interested in
physicians willing to serve on panels full-time. However, a NIOSH
official indicated that only a handful of physicians would likely be
interested in serving full-time on the panels.
Energy officials have also explored additional sources from which NIOSH
might recruit qualified physicians, but they have expressed concerns
that the current statutory cap on the rate of pay for panel physicians
may limit the willingness of physicians from these sources to serve on
the panels. For example, Energy officials have suggested that
physicians in the military services might be used on a part-time basis,
but the rate of pay for their military work exceeds the current cap.
Similarly, physicians from the Public Health Service could serve on
temporary full-time details as panel physicians. To elevate the rate of
pay for panel physicians to a level that is consistent with the rate
physicians from these sources normally receive, Energy officials plan
to develop a legislative proposal that will modify the current cap on
the rate of pay and would also expand Energy's hiring authority.
Panel physicians have also suggested methods to Energy for improving
the efficiency of the panels. For example, some physicians have said
that more complete profiles of the types and locations of specific
toxic substances at each facility would speed their ability to decide
cases. While Energy officials reported that they have completed
facility overviews for about half the major sites, specific site
reference data are available for only a few sites. Energy officials
told us that, in their view, the available information is sufficient
for decision making by the panels. However, based on feedback from the
physicians, Energy officials are exploring whether developing
additional site information would be cost beneficial.
Energy Has Not Sufficiently Communicated Case Status and Expectations
about the Process to Claimants:
Energy has not always provided claimants with complete and timely
information about what they could achieve in filing under this program.
Energy officials concede that claimants who filed in the early days of
the program may not have been provided enough information to understand
the benefits they were filing for. As a consequence, some claimants who
filed under both Subtitle B and Subtitle D early in the program later
withdrew their claims under Subtitle D because they had intended to
file only for Subtitle B benefits or because they had not understood
that they would still have to file for state workers' compensation
benefits after receiving a positive determination from a physician
panel. After the final regulations were published in August 2002,
Energy officials said that claimants had a better understanding of the
benefits for which they were applying.
Energy has not kept claimants sufficiently informed about the status of
their claims under Subtitle D. Until recently, Energy's policy was to
provide no written communication about claims status between the
acknowledgement letters it sent shortly after receiving applications
and the point it began to process claims. Since nearly half of the
claims filed in the first year of the program remained unprocessed as
of December 31, 2003, these claimants would have received no
information about the status of their claims for more than 1 year.
Energy recently decided to change this policy and provide letters at 6-
month intervals to all claimants with pending claims. Although the
first of these standardized letters sent to claimants in the fall of
2003 did not provide information about individual claims status, it did
inform claimants about a new service on the program's redesigned Web
site through which claimants can check on the status of their claim.
However, this new capability does not provide claimants with
information about the timeframes during which their claims are likely
to be processed and claimants would need to re-check the status
periodically to determine whether the status of the claim has changed.
Claimants may not be given sufficient information as to what they are
likely to encounter when they file for state workers' compensation
benefits. Energy's letter to claimants transmitting a positive
determination from a physician panel does not always provide enough
information about how they would go about filing for state workers'
compensation benefits. For example, a contractor in Tennessee reported
that a worker was directed by Energy's letter received in September
2003 to file a claim with the state office in Nashville when
Tennessee's rules require that the claim be filed with the employer.
The contractor reported the problem to Energy in the same month, but
Energy letters sent to Tennessee claimants in October and December 2003
continued to direct claimants to the state office. Finally, claimants
are not informed as to whether there is likely to be a willing payer of
workers' compensation benefits and what this means for the processing
of that claim. Specifically, advocates for claimants have indicated
that claimants may be unprepared for the adversarial nature of the
workers' compensation process when an insurer or state fund contests
the claim.
Workers' Compensation Claims For a Majority of Cases Are Not Likely to
be Contested:
The workers' compensation claims for the majority of cases associated
with major Energy facilities in 9 states[Footnote 5] are likely to have
no challenges to their claims for state workers' compensation benefits.
Specifically, based on additional analysis of workers' compensation
programs and the different types of workers' compensation coverage used
by the major contractors, it appears that slightly more than half of
the cases will potentially have a willing payer--that is, contractors
that will not contest the claims for benefits as ordered by Energy.
Another 25 percent of the cases, while not technically having a willing
payer, have workers' compensation coverage provided by an insurer that
has stated that it will not contest these claims and is currently
processing several workers' compensation claims without contesting
them. The remaining 20 percent of cases in the 9 states we analyzed are
likely to be contested. Because of data limitations, these percentages
provide an order of magnitude estimate of the extent to which claimants
will have willing payers.[Footnote 6] The estimates are not a
prediction of actual benefit outcomes for claimants.
As shown in table 1, the contractors for four major facilities in these
states are self-insured, which enables Energy to direct them to not
contest claims that receive a positive medical determination.[Footnote
7] In such situations where there is a willing payer, the contractor's
action to pay the compensation consistent with Energy's order to not
contest a claim will override state workers' compensation provisions
that might otherwise result in denial of a claim, such as failure to
file a claim within a specified period of time. Similarly, the
agreement by the commercial insurer for the workers at the two
facilities that constitute 25 percent of the cases to pay the workers
compensation claims will mostly likely also supercede such state
provisions. However, since the insurer is not bound by Energy's orders
and it does not have a formal agreement with either Energy or the
contractors to not contest these claims, there is nothing to guarantee
that the insurer will continue to process claims in this manner.
Table 1: Extent to Which Cases Will Potentially Be Contested in 9
States:
Likely Outcome; Contests are Not Likely:
Willing Payer Available? Yes;
Types of Workers Comp. Coverage: Self-insurance;
Energy Facility, State:
* Paducah Gaseous Diffusion Plant, Kentucky [A];
Number of Cases as reported in Energy data: 2,133;
* Los Alamos National Lab, New Mexico;
Number of Cases as reported in Energy data: 1,380;
* Oak Ridge K-25, X-10, and Y-12 Plants, Tennessee;
Number of Cases as reported in Energy data: 4,155;
* Hanford Site, Washington;
Number of Cases as reported in Energy data: 1,798;
Percentage of Cases in Category: 55 %.
Likely Outcome; Contests are Not Likely:
Subtotal; Number of Cases as reported in Energy data: 9,426.
Likely Outcome; Contests are Not Likely:
Willing Payer Available? No;
Types of Workers Comp. Coverage: Commercial Policy, Insurer Will Follow
Contractors Instructions to Not Contest;
Energy Facility, State:
* Idaho National Engineering Lab, Idaho;
Number of Cases as reported in Energy data: 849;
* Savannah River Site, South Carolina;
Number of Cases as reported in Energy data: 3,375;
Percentage of Cases in Category: 25 %.
Likely Outcome; Contests are Not Likely:
Subtotal; Number of Cases as reported in Energy data: 4,224;
Likely Outcome; Contests are Not Likely: Subtotal;
Number of Cases as reported in Energy data: 13,650;
Percentage of Cases in Category: 80 %.
Likely Outcome; Contests Likely:
Willing Payer Available? No;
Types of Workers Comp. Coverage: Commercial policy;
Energy Facility, State:
* Rocky Flats Plant, Colorado;
Number of Cases as reported in Energy data: 1,630.
Likely Outcome; Contests Likely:
Willing Payer Available? No;
Types of Workers Comp. Coverage: State Fund;
Energy Facility, State:
* Portsmouth Gaseous Diffusion Plant, Ohio;
Number of Cases as reported in Energy data: 862;
* Feed Materials Production Center, Ohio;
Number of Cases as reported in Energy data: 286;
* Mound Plant, Ohio;
Number of Cases as reported in Energy data: 91.
Likely Outcome; Contests Likely:
Subtotal; Number of Cases as reported in Energy data: 1,239;
Likely Outcome; Contests Likely:
Types of Workers Comp. Coverage: No Current Contractor;
Energy Facility, State:
* Iowa Ordnance Plant, Iowa;
Number of Cases as reported in Energy data: 645.
Likely Outcome; Contests Likely:
Subtotal; Number of Cases as reported in Energy data: 3,514;
Percentage of Cases in Category: 20%.
Source: GAO analysis of Energy data and interviews with current
contractors and state officials.
Note: The table includes the cases from the facilities in these states
with the largest number of cases filed but does not include the
remaining 693 cases (4 percent) from other facilities in these states.
[A] A total of 2,370 cases have been filed for the Paducah Gaseous
Diffusion Plant, which has been operated since July 1998 by a private
entity that leases the facility. Energy recently decided that workers
who have only been employed by this private entity, and not by the
prior contractors who operated the facility, will not be eligible for
the program. An Energy contractor performing environmental cleanup at
the site also employs workers at the facility. This contractor is
responsible for the workers' compensation claims filed by its employees
as well as those filed by employees of the contractors who operated the
facility prior to July 1998. We apportioned 90 percent of the cases
filed for the Paducah facility (2,133) to the cleanup contractor
because the facility was run by the prior contractors for about 90
percent of its years in operation. We apportioned the remaining 10
percent of the cases (237) to the private entity and do not show these
cases in the table, due to Energy's decision that claims filed by the
entity's workers would be ineligible for the program. However, this
apportionment involves some uncertainty because the clean up contractor
has not had an opportunity to analyze the effects of Energy's policy
decision.
[End of table]
About 20 percent of cases in the 9 states we analyzed are likely to be
contested. Therefore, in some instances, these cases may be less likely
to receive compensation than a comparable case for which there is a
willing payer, unless the claimant is able to overcome challenges to
the claim. In addition, contested cases can take longer to be resolved.
For example, one claimant whose claim is being contested by an insurer
was told by her attorney that because of discovery and deposition
motions by the opposing attorney, it would be two years before her case
was heard on its merits. Specifically, the cases that lack willing
payers involve contractors that (1) have a commercial insurance policy,
(2) use a state fund to pay workers' compensation claims, or (3) do not
have a current contract with Energy. In each of these situations,
Energy maintains that it lacks the authority to make or enforce an
order to not contest claims. For instance, an Ohio Bureau of Workers'
Compensation official said that the state would not automatically
approve a case, but would evaluate each workers' compensation case
carefully to ensure that it was valid and thereby protect its state
fund. Further, although the contractor in Colorado with a commercial
policy attempted to enter into agreements with prior contractors and
their insurers to not contest claims, the parties have not yet agreed
and several workers' compensation claims filed with the state program
are currently being contested.
Several Issues Should Be Considered in Evaluating Options for Improving
the Likelihood of Willing Payers:
Various options are available to improve payment outcomes for the cases
that receive a positive determination from Energy, but lack willing
payers under the current program. If it chooses to change the current
program, Congress would need to examine these options in terms of
several issues, including the source, method, and amount of the federal
funding required to pay benefits; the length of time needed to
implement changes; the criteria for determining who is eligible; and
the equitable treatment of claimants. In particular, the cost
implications of these options for the federal government should be
carefully considered in the context of the current federal fiscal
environment.
Options for Changing the Current Program:
We identified four possible options for improving the likelihood of
willing payers, some of which have been offered in proposed
legislation. While not exhaustive, the options range from adding a
federal benefit to the existing program for cases that lack a willing
payer to addressing the willing payer issue as part of designing a new
program that would allow policymakers to decide issues such as the
eligibility criteria and the type and amount of benefits without being
encumbered by existing program structures. A key difference among the
options is the type of benefit that would be provided.
Option 1--State workers' compensation with federal back up. This option
would retain state workers' compensation structure as under the current
Subtitle D program but add a federal benefit for cases that receive a
positive physician panel determination but lack a willing payer of
state workers' compensation benefits. For example, claims involving
employees of current contractors that self-insure for workers'
compensation coverage would continue to be processed through the state
programs. However, claims without willing payers such as those
involving contractors that use commercial insurers or state funds
likely to contest workers' compensation claims could be paid a federal
benefit that approximates the amount that would have been received
under the relevant state program.
Option 2--Federal workers' compensation model. This option would move
the administration of the Subtitle D benefit from the state programs
entirely to the federal arena, but would retain the workers'
compensation concept for providing partial replacement of lost wages as
well as medical benefits. For example, claims with positive physician
panel determinations could be evaluated under the eligibility criteria
of the Federal Employees Compensation Act[Footnote 8] and, if found
eligible, could be paid benefits consistent with the criteria of that
program.
Option 3--Expanded Subtitle B program that does not use a workers'
compensation model. Under this option, the current Subtitle B program
would be expanded to include the other illnesses resulting from
radiation and toxic exposures that are currently considered under the
Subtitle D program. The Subtitle D program would be eliminated as a
separate program and, if found eligible, claimants would receive a
lump-sum payment and coverage of future medical expenses related to the
workers' illnesses, assuming they had not already received benefits
under Subtitle B. The Department of Labor would need to expand its
regulations to specify which illnesses would be covered and the
criteria for establishing eligibility for each of these illnesses. In
addition, since the current programs have differing standards for
determining whether the worker's illness was related to his
employment[Footnote 9], it would have to be decided which standard
would be used for the new category of illnesses.
Option 4--New federal program that uses a different type of benefit
structure. This option would address the willing payer issue as part of
developing a new program that involves moving away from the workers'
compensation and Subtitle B structures and establishing a new federal
benefit administered by a structure that conforms to the type of the
benefit and its eligibility criteria. This option would provide an
opportunity to consider anew the purpose of the Subtitle D provisions.
As a starting point, policymakers could consider different existing
models such as the Radiation Exposure Compensation Act, designed to
provide partial restitution to individuals whose health was put at risk
because of their exposure even when their illnesses do not result in
ongoing disability. But they could also choose to build an entirely new
program that is not based on any existing model.
Various Issues Should Be Considered in Deciding Whether Changes Are
Needed and Assessing the Options:
In deciding whether and how to change the Subtitle D program to ensure
a source of benefit payments for claims that would be found eligible if
they had a willing payer, policymakers will need to consider the trade-
offs involved. Table 2 arrays the relevant issues to provide a
framework for evaluating the range of options in a logical sequence. We
have constructed the sequence of issues in this framework in terms of
the purpose and type of benefit as being the focal point for the
evaluation, with consideration of the other issues flowing from that
first decision. For example, decisions about eligibility criteria would
need to consider issues relating to within-state and across-state
equity for Subtitle D claimants. The framework would also provide for
decisions on issues such as the source of federal funding--trust fund
or increased appropriations--and the appropriate federal agency to
administer the benefit. For each of the options, the type of benefit
would suggest which agency should be chosen to administer the benefit
and would depend, in part, on an agency's capacity to administer a
benefit program. In examining these issues, the effects on federal
costs would have to be carefully considered. Ultimately, policymakers
will need to weigh the relative importance of these issues in deciding
whether and how to proceed.
Purpose and Type of Benefit:
In evaluating how the purpose and type of benefit now available under
Subtitle D could be changed, policymakers would first need to focus on
the goals they wish to achieve in providing compensation to this group
of individuals. If the goal is to compensate only those individuals who
can demonstrate lost wages because of their illnesses, a recurring cash
benefit in an amount that relates to former earnings might be in order
and a workers' compensation option, either a state benefits with a
federal back up or a federal workers' compensation benefit, would
promote this purpose. If, on the other hand, the goal is to compensate
claimants for all cases in which workers were disabled because of their
employment--even when workers continue to work and have not lost wages-
the option to expand Subtitle B would allow a benefit such as a flat
payment amount not tied to former earnings.
For consideration of a new federal program option, it might be useful
to also consider other federal programs dealing with the consequences
of exposure to radiation as a starting point. For example, the
Radiation Exposure Compensation Act was designed to provide partial
restitution to individuals whose health was put at risk because of
their exposure. Similar to Subtitle B, the act created a federal trust
fund, which provides for payments to individuals who can establish that
they have certain diseases and that they were exposed to radiation at
certain locations and at specified times. However, this payment is not
dependent on demonstrating ongoing disability or actual losses
resulting from the disease.
Eligibility Criteria and Equity of Outcomes:
The options could also have different effects with respect to
eligibility criteria and the equity of benefit outcomes for current
Subtitle D claimants based on these criteria. By equity of outcomes, we
mean that claimants with similar illnesses and circumstances receive
similar benefit outcomes. The current program may not provide equity
for all Subtitle D claimants within a state because a claim that has a
willing payer could receive a different outcome than a similar claim
that does not have a willing payer, but at least three of the options
could provide within-state equity. With respect to across-state equity,
the current program and the option to provide a federal back up to the
state workers' compensation programs would not achieve equity for
Subtitle D claimants in different states. In contrast, the option based
on a federal workers' compensation model as well as the expanded
Subtitle B option would be more successful in achieving across-state
equity.[Footnote 10]
Regardless of the option, changes made to Subtitle D could also
potentially result in differing treatment of claims decided before and
after the implementation of the change. In addition, changing the
program to remove the assistance in filing workers' compensation claims
may be seen as depriving a claimant of an existing right. Further, any
changes could also have implications beyond EEOICPA, to the extent that
the changes to Subtitle D could establish precedents for federal
compensation to private sector employees in other industries who were
made ill by their employment.
Federal Costs:
Effects on federal costs would depend on the generosity of the benefit
in the option chosen and the procedures established for processing
claims for benefits. Under the current program, workers' compensation
benefits that are paid without contest will come from contract dollars
that ultimately come from federal sources - there is no specific
federal appropriation for this purpose. Because all of the options are
designed to improve the likelihood of payment for claimants who meet
all other criteria, it is likely that federal costs would be higher for
all options than under the current program. Specifically, federal costs
would increase for the option to provide a federal back up to the state
workers' compensation program because it would ensure payment at rates
similar to the state programs for the significant minority of claimants
whose claims are likely to be contested and possibly denied under the
state programs. Further, the federal costs of adopting a federal
workers' compensation option would be higher than under the first
option because all claimants - those who would have been paid under the
state programs as well as those whose claims would have been contested
under the state programs - would be eligible for a federal benefit
similar to the benefit for federal employees. In general, federal
workers' compensation benefits are more generous than state benefits
because they replaces a higher proportion of the worker's salary than
many states and the federal maximum rate of wage replacement is higher
than all the state maximum rates.
For either of the two options above, a decision to offset the Subtitle
D benefits against the Subtitle B benefit could lessen the effect of
the increased costs, given reports by Energy officials that more than
90 percent of Subtitle D claimants have also filed for Subtitle B
benefits.[Footnote 11] However, the degree of this effect is difficult
to determine because many of the claimants who have filed under both
programs may be denied Subtitle B benefits. The key distinction would
be whether workers who sustained certain types of illnesses based on
their Energy employment should be compensated under both programs as
opposed to recourse under only one or the other. If they were able to
seek compensation from only one program, the claimant's ability to
elect one or the other based on individual needs should be considered.
The effects on federal cost of an expanded Subtitle B option or a new
federal program option are more difficult to assess. In many cases, the
Subtitle B benefit of up to $150,000 could exceed the cost of the
lifetime benefit for some claimants under either of the workers'
compensation options, resulting in higher federal costs. However, the
extent of these higher costs could be mitigated by the fact that many
of the claimants who would have filed for both benefits in the current
system would be eligible for only one cash benefit regardless of the
number or type of illnesses. The degree of cost or savings would be
difficult to assess without additional information on the specific
claims outcomes in the current Subtitle B program. The effects on
federal costs for the new federal program option would depend on the
type and generosity of the benefit selected.
Table 2: Framework for Evaluating Options to Change the Subtitle D
Program:
Purpose and type of benefit;
Current program: Varies by state, but generally includes medical
treatment and cash payments that partially replace lost wages;
Option 1--State workers' compensation with federal back-up: Same as
under current state programs;
Option 2--Federal workers' compensation model: Still a workers'
compensation benefit, generally includes medical treatment and cash
payments that partially replace lost wages;
Option 3--Expanded Subtitle B program: Same as for current Subtitle B--
coverage of future medical treatment and a one-time payment of up to
$150,000 as compensation for disability or death because of exposure to
radiation or toxic substance;
Option 4--New federal benefit: Open for consideration.
Eligibility criteria;
Current program: Vary by state, but generally apply to workers who
contract a work-related illness and who lose work time because of the
illness;
Option 1--State workers' compensation with federal back-up: For federal
back-up benefit, should be similar to criteria under current state
programs;
Option 2--Federal workers' compensation model: Uses criteria of
workers' compensation program for federal employees;
Option 3--Expanded Subtitle B program: Same as for current Subtitle B
claimants who worked for Energy contractors;
Option 4--New federal benefit: Open for consideration--should flow
from type of benefit and the nature of the population it is designed to
compensate.
Interaction with Subtitle B;
Current program: Benefits are not offset against each other;
Option 1--State workers' compensation with federal back-up: Open for
consideration;
Option 2--Federal workers' compensation model: Open for consideration;
Option 3--Expanded Subtitle B program: No interaction issues. Claimants
would be eligible for only one payment regardless of number of
illnesses. Because there is a large overlap in claimants filing under
both programs, this could potentially reduce the total number of claims
that would remain to be processed once combined;
Option 4--New federal benefit: Open for consideration. Depends on the
nature of the benefit.
Equity of Outcomes within Subtitle D: within states;
Current program: Similar cases in the same state could receive
differing benefits;
Option 1--State workers' compensation with federal back-up: Similar
cases in the same state could receive similar benefits regardless of
employer;
Option 2--Federal workers' compensation model: Similar cases in the
same state could receive similar benefits regardless of employer;
Option 3--Expanded Subtitle B program: Similar cases in the same state
could receive similar benefits regardless of employer;
Option 4--New federal benefit: Open for consideration.
Equity of Outcomes within Subtitle D: across states;
Current program: Similar cases in different states could receive
differing compensation;
Option 1--State workers' compensation with federal back-up: Similar
cases in different states could receive differing compensation;
Option 2--Federal workers' compensation model: Similar cases in
different states could receive similar compensation;
Option 3--Expanded Subtitle B program: Similar cases in different
states could receive similar compensation;
Option 4--New federal benefit: Open for consideration.
Funding source for benefits;
Current program: Most eligible cases with willing payers will be paid
by contractors from contract funds from federal sources;
Option 1--State workers' compensation with federal back-up: Same as
current program for cases with willing payer, but would need a source
for federal back-up benefit;
Option 2--Federal workers' compensation model: Would need new federal
source;
Option 3-- Expanded Subtitle B program: Trust fund already established
by Section 3612 of EEOICPA;
Option 4--New federal benefit: Open for consideration--Appropriations
or trust fund.
Federal administrator;
Current program: Energy;
Option 1--State workers' compensation with federal back-up: For federal
benefit, selection criteria should include how quickly agency could
implement and how well it was situated to process and pay cases. Energy
would still need to secure records for all cases and process claims
with willing payers;
Option 2--Federal workers' compensation model: Department of Labor/
Office of Workers' Compensation administers current program;
also administers Subtitle B program. Energy would still need to secure
records;
Option 3--Expanded Subtitle B program: Department of Labor--same as
current Subtitle B program;
Option 4--New federal benefit: Open for consideration--depends on type
of benefit, experience in administering benefit program, and funding
source.
Timeframe for implementation;
Current program: Program is implemented, but few cases have been
completely processed;
Option 1--State workers' compensation with federal back-up: Relatively
short to implement since it is based on existing program.
Infrastructure would have to be established and rules developed to
provide for federal benefits that mirror those of the state programs;
Option 2--Federal workers' compensation model: Longer than Option 1.
Infrastructure in place, but regulations for existing federal workers'
compensation program would need to be expanded to cover new benefit;
Option 3--Expanded Subtitle B program: Longer than Option 1-structure
in place to administer existing Subtitle B program--new rules need to
be developed for evaluating additional illnesses;
Option 4--New federal benefit: Potentially longest of all options.
Depends on administrator and whether infrastructure exists or would
need to be built. In either event, need to publish rules and establish
procedures.
Federal cost;
Current program: For cases that are not contested, benefits that are
paid will ultimately come from contract dollars from federal sources
(Energy and Defense);
Option 1--State workers' compensation with federal back-up: Federal
costs could increase since benefits for cases without willing payers
would be paid directly from federal funds;
Option 2--Federal workers' compensation model: Federal costs could be
greater than for current program since benefits would be based on the
often more generous workers' compensation program for federal workers;
Option 3--Expanded Subtitle B program: To the extent that the option
would ensure a source of benefits, could increase federal costs.
However, the extent of these higher costs could be mitigated because
many of the claimants who would have filed for Subtitle B and D
benefits in the current system would be eligible for only one cash
benefit regardless of the number or type of illnesses;
Option 4--New federal benefit: Open for consideration--Depends on type
of benefit and eligibility criteria.
Source: GAO analysis.
[End of table]
Mr. Chairman, this completes my prepared statement. I would be happy to
respond to any questions you or other Members of the Committee may have
at this time.
Contacts and Acknowledgments:
For information regarding this testimony, please contact Robert E.
Robertson, Director, or Andrew Sherrill, Assistant Director, Education,
Workforce, and Income Security, at (202) 512-7215. Individuals making
contributions to this testimony include Amy E. Buck, Melinda L.
Cordero, and Beverly Crawford.
FOOTNOTES
[1] We collected data as of this date to enable us to assess the
reliability of Energy's data by (1) performing electronic testing for
obvious errors in accuracy and completeness, (2) reviewing available
documentation, and (3) interviewing agency officials and contractors
knowledgeable about the data. We determined that the data elements used
were sufficiently reliable for our purposes.
[2] Executive Order 13179 of December 7, 2000.
[3] This 13-year estimate assumes that none of the pending cases would
be determined ineligible on the basis of noncovered employment or
illnesses because we did not possess a sufficient basis for projecting
the number of pending cases that would be determined ineligible in the
future.
[4] In March 2004, Energy requested additional physicians from NIOSH
that would result in tripling the number of full-time equivalent
physicians in 2004 and increasing the number of full-time equivalent
physicians by a factor of 6 in 2005.
[5] The cases in these 9 states represent more than three-quarters of
the cases filed nationwide. The results of our analysis cannot
necessarily be applied to the remaining 25 percent of the cases filed
nationwide.
[6] Because of data limitations, we assumed that: (1) all cases filed
would receive a positive determination by a physician panel, (2) all
workers lost wages because of the illness and were not previously
compensated for this loss, and (3) in all cases, the primary contractor
rather than a subcontractor at the Energy facility employed the worker.
[7] EEOICPA allows Energy, to the extent permitted by law, to direct
its contractors not to contest such workers' compensation claims. In
addition, the statute prohibits the inclusion of the costs of
contesting such claims as allowable costs under its contracts with the
contractors; however, Energy's regulations allow the costs incurred as
the result of a workers' compensation award to be reimbursed in the
manner permitted under the contracts.
[8] The Federal Employees' Compensation Act (5 U.S.C. 8101, et seq.)
provides workers' compensation coverage for federal and postal
employees, who are not covered by the state programs.
[9] Under Subtitle B, an individual with specified types of cancer
shall be determined to have sustained that condition in the performance
of duty if the cancer was at least as likely as not related to
employment at a specified facility. Under Subtitle D, a physician panel
must decide whether it is at least as likely as not that exposure to a
toxic substance in the course of employment was a significant factor in
aggravating, contributing to, or causing the illness or death of the
worker.
[10] An additional within-state equity issue involves the comparative
treatment of Subtitle D claimants and all other workers' compensation
claimants in the same state.
[11] Under the current Subtitle B and Subtitle D programs, benefits are
not offset against each other.